Pakistan’s economy grows 3.7% in 2026, says World Bank

The World Bank has released its Pakistan Development Update 2026, reporting economic growth of 3.7 per cent in 2026 alongside

ISLAMABAD: The World Bank has released its Pakistan Development Update 2026, reporting economic growth of 3.7 per cent in 2026 alongside improvements in the country’s fiscal position and credit ratings.

According to the report, Pakistan’s average core inflation in urban areas stood at 7.4 per cent during fiscal year 2025-26. The country’s overall fiscal deficit also declined to 2.6 per cent of gross domestic product (GDP), indicating an improvement in the government’s fiscal position.

However, rising fuel prices and transport costs continued to put pressure on households and businesses during the first half of 2026. The report showed that petrol prices increased by approximately 36 per cent between February and June, while high-speed diesel became around 31 per cent more expensive.

Liquefied petroleum gas (LPG) prices recorded an increase of nearly 46 per cent over the same period. Transport fares also rose by approximately 30 per cent, adding to the financial burden on commuters and people dependent on public transport.

The increase in fuel prices has implications for transportation, goods distribution and other economic activities. Higher transport costs can also affect the prices of essential commodities, increasing pressure on household budgets.

The report also highlighted improvements in Pakistan’s credit ratings by international rating agencies S&P Global Ratings and Moody’s. Better credit ratings can strengthen investor confidence and potentially improve a country’s access to international financing, although borrowing costs also depend on market conditions and other economic risks.

The latest assessment presents a mixed picture of Pakistan’s economy. Economic growth and a lower fiscal deficit indicate progress, while increases in fuel prices, LPG costs and transport fares underline the continuing challenges facing consumers and businesses.

The report’s findings highlight the importance of sustaining economic growth, maintaining fiscal discipline and managing inflationary pressures to support a more stable economic recovery.